POST ACC522 Unit 3 Discussion Latest 2018 October

ACC522 Advanced Audit Issues

Unit 3 Discussion

MATERIALITY

What is materiality as it relates to accounting and auditing? What is the relationship between materiality and the phrase “obtain reasonable assurance” in the auditor’s report?

How are benchmarks used in setting a preliminary judgement about materiality? How will these benchmarks differ based on the client’s industry?

Explain why materiality is important but difficult to apply in practice.

What’s the BIG DEAL about RISK?

What procedures would you perform during the risk assessment process? Why would you choose these procedures?

Besides inquiring from the management involved in preparing the financial statements, who else should you inquire from as part of your risk assessment procedures? Describe how these individuals might be helpful to you in assessing risks of material misstatement?

When the auditor determines that "a risk of material misstatement is considered a significant risk, what are the next steps that the auditor may likely perform?